The pandemic COVID-19 has struck at the roots of mostsectors and had stalled the livelihoods of almost everyone, especially those inthe unorganized sector.
To fund their businesses, many individuals take loans andthe lenders charge interest and failing that “interest on interest” is charged.
But the overwhelming reality of the pandemic could not bebrushed aside and the government went ahead and proposed a waiver for asix-month period on “interest on interest”.
The issue was handled in the Supreme Court, the apex court ruledin the favor of the borrowers though did not ignore the financial burden thesame would put on the lenders.
Later, when time was asked for to implement the same, theSupreme Court challenged the former as to why so much time is required, “SCObserves - When the govt has taken a decision to waive interest, why is ittaking so much time to implement.”
The Supreme Court observed in a light-hearted manner theDiwali of the borrowers was in the hands of the government.
The Finance Ministry is doing its duties and has releasedguidelines for the implementation of the order decided by the government.
In the festival gift to borrowers, the Finance Ministry onWednesday approved guidelines for a scheme for grant of ex-gratia payment ofthe difference between compound interest and simple interest for six months ofloans up to Rs 2 crore.
As per the operational guidelines issued by Department ofFinancial Services, the scheme can be availed by borrowers in specified loanaccounts for a period from March 1 to August 31, 2020.
"Borrowers who have loan accounts having sanctionedlimits and outstanding amount of not exceeding Rs 2 crore (aggregate of allfacilities with lending institutions) as on February 29 shall be eligible forthe scheme," it said.
Also Read: 10 Indian students win ‘Korea-India Friendship Quiz Contest 2020' and a free trip to discover Korea
Housing loan, education loans, credit card dues, auto loans,MSME loans, consumer durable loans and consumption loans are covered under thescheme.
As per the scheme, the lending institutions shall credit thedifference between compound interest and simple interest with regard to theeligible borrowers in respective accounts for the said period irrespective ofwhether the borrower fully or partially availed the moratorium on repayment ofloan announced by the RBI on March 27, 2020.
The scheme is applicable on those who have not availed themoratorium scheme and continued with the repayment of loans.
The lending institutions after crediting the amount willclaim the reimbursement from the central government.
According to sources, the government will have to shell outRs 6,500 crore for the implementation of the scheme, but the “Diwali” of theborrower will be saved and the sanctity of the Indian judicial system will beupheld.